Nykaa IPO | Can Nykaa IPO add beauty to your Portfolio| Should You Subscribe?

11 min read

FSN E-Commerce Ventures Limited or famously known as Nykaa has come up with its IPO worth Rs. 5,352 Cr. The window for subscribing to this IPO has commenced from 28th of October 2021 and will last till the 1st of November 2021. The IPO has got an overwhelming response from the Anchor Investors and the Retail Quota has got fully subscribed on the initial hours of the first day itself. Looking at the significant responses from the investors, the sentiments on the streets, and the GMP Of the stock, the IPO is expected to witness a blockbuster listing. Hence in this context, we will discuss in this article that whether this IPO can add beauty to your portfolio or not, and thereby one should subscribe to this IPO or not as well. Here goes the 6-point detailed analysis:

1) IPO Details:

Nykaa- IPO Details
  • The IPO Window of Nykaa is open between 28th October 2021 to 1st November 2021.
  • The Issue Size of the IPO is Rs. 5,352 Cr. which consists of Fresh Issue and Offer for Sale.
  • The IPO consists of a Fresh Issue worth Rs. 630 Cr. and Offer for Sale (OFS) worth Rs. 4,722 Cr. The OFS consist of selling 41,972,660 Equity Shares.
  • The IPO is getting listed at both the stock exchange- Bombay Stock Exchange (BSE) and National Stock Exchange (NSE).
  • The price band of the IPO is Rs. 1,085 to Rs. 1,125 per equity share.
  • The Face Value is Rs. 1 per equity share.
  • The Investor Quota of the IPO is as follows Qualified Institutional Buyers (QIB)- 75%, Non-Institutional Investors (NIIs)-15%, and Retail Investors- 10%. The Issue also contains an Employee Reservation of 2,50,000 Equity Shares.
  • The IPO Lot consists of 12 shares in 1 lot and multiples thereof up to 14 Lots.
  • The Allotment Date for Nykaa IPO is 8th November 2021 and it will get listed on the Stock Exchange on 11th November 2021.
  • The objective of the Issue :
  • Investment in certain Subsidiaries, namely, FSN Brands and/or Nykaa Fashion for funding the set-up of new retail stores- Rs. 42 Cr.
  • Capital expenditure to be incurred by Company and investment in certain of Subsidiaries, namely, Nykaa E-Retail, FSN Brands, and Nykaa Fashion for funding the set-up of new warehouses- Rs. 42 Cr.
  • Repayment or prepayment of outstanding borrowings availed by the Company and one of our Subsidiaries, namely, Nykaa E-Retail- Rs. 156 Cr.
  • Expenditure to enhance the visibility and awareness of the brands- Rs. 234 Cr.
  • General Corporate Purposes- Rs. 126 Cr.
  • The stake of Promoter’s & Promoter’s Group in the company Pre-IPO was 54.22% which will slightly go down to 52.56% post listing of the IPO.
  • The Selling Shareholders are:

i) Promoter & Promoter’s Group:

  • Sanjay Nayar Family Trust- up to 48 Lakh Shares

ii) Investors (No. of Equity Shares):

  • TPG Growth IV SF Pte. Ltd.- Up to 54,21,510
  • Lighthouse India Fund III Ltd.- 48,44,620
  • Lighthouse India III Employee Trust- 51,530
  • Yogesh Agencies & Investments Pvt. Ltd.: 25,38,450
  • JM Financial and Investment Consultancy Services Pvt. Ltd- 9,14,000
  • Other- 23,402,550
  • In Pre-IPO Placement, Nykaa has been able to raise Rs. 2,395 Cr. from 174 Anchor Investors which also includes big names like Blackrock, Fidelity, JP Morgan, HDFC, Nomura, etc.

2) About Company:

  • FSN E-Commerce Ventures Limited was incorporated on April 24, 2012. Nykaa is a digital native consumer technology platform, delivering a content-led, lifestyle retail experience to consumers.
  • The Company is having a diverse portfolio of beauty, personal care, and fashion products.
  • Nykaa offers consumers an omnichannel experience with an endeavor to cater to the consumer’s preference & convenience:

Online: Company’s online channels include mobile applications, websites, and mobile sites. As of August 31, 2021, they had cumulative downloads of 55.8 million across all their mobile applications and during the FY21-22, 88.2% of their online GMV came through mobile applications.

Offline: Their offline channel comprises 80 Physical stores across 40 cities in India over 3 different store formats as of August 31, 2021.

  • Nykaa has 2 Business Verticals:

i) Nykaa: (Beauty & Personal Care)- manufacture owned brand beauty and personal care products through third-party manufacturers contracted by us.           

ii) Nykaa Fashion: Apparel and Accessories

  • As of August 31, 2021, the company had 2,295 employees, of which 47% were women. Also, there is 353 Contract Employee as well.
  • The Company is having 9 Direct Subsidiaries and 2 Step-Down Subsidiaries.

Major Events of Nykaa:

  • 2012- Incorporation of FSN E-Commerce Ventures Private Limited
  • 2014- Opened First Physical Store at T3 International Airport, New Delhi
  • 2015- Hosted the Nykaa.com Femina Beauty Awards, Launched Makeup and Beauty Accessories Brand ‘Nykaa Cosmetics’
  • 2016- Launched naturally derived ingredients focused skincare brand ‘Nykaa Naturals’
  • 2018- Launched ‘Nykaa Fashion’ as a curated and managed marketplace, Agreed with Katrina Kaif to launch “Kay Beauty”
  • 2019- Collaborated with Vogue India to present ‘The Vogue x Nykaa Fashion: Power List 2019’, Acquired the clothing brand ‘20 Dresses’
  • 2020- Launched its intimate wear brand ‘Nykd by Nykaa’, Charlotte Tilbury launched exclusively on Nykaa.
  • 2021- Opened Nykaa Fashion Store in Ambience Mall, New Delhi, Acquired the jewelry brand ‘Pipa Bella’, Launched first MBO store for Nykaa Fashion, Launched ‘The Global Store’, and Acquired skincare brand, ‘Dot & Key’

Nykaa Platform:

  • As of August 31, 2021, the company offered approximately 31 Lakhs SKUs from 4,078 national and international brands to consumers across business verticals. In the Financial Year 2021, our total GMV was Rs. 4046 Cr., which grew 50.7% from the Financial Year 2020.
  • For the three months ended June 30, 2021, our total GMV was ₹14,670 Cr., which grew 238.8% from the three months ended June 30, 2020.
  • As per the RedSeer Report, the largest Specialty Beauty and Personal Care Platform in India in terms of the value of products sold in the Financial Year 2021 and the five months ended August 31, 2021.

Geographical Presence:

  • As of August 31, 2021, the company had an integrated supply chain comprising of 20 warehouses (of which two are outsourced) across India, with a total capacity of 665,371 sq. ft., supported by 80 physical stores.
  • As of August 31, 2021, the company served 26,727 pin codes, covering 89.2% of the serviceable pin codes across the country, and had 20 warehouses with a storage space of 665,371 sq. ft.

Brands & Stores of Nykaa:


a) Nykaa Cosmetics: Starting with nail paints as the first SKU in 2015, today Nykaa Cosmetics is a comprehensive makeup and beauty accessories brand present across lips, face, nails, eyes, and beauty tools, which has an appeal owing to its product formulations and quality standards.

b) Nykaa Naturals: Nykaa Naturals is a naturally derived ingredient-focused brand for skincare products launched in 2016. The product portfolio caters to a variety of skin and skin concerns, such as acne to anti-aging.

c) Kay Beauty: entered in 2018, Kay Beauty is jointly developed between one of India’s Bollywood actors, Katrina Kaif, and Nykaa.

d) Dot & Key: Acquired in September 2021, Dot & Key is a new-age brand focused on providing solutions to skincare problems and offers premium skincare products across serums, toners cleansers, and face masks.

e) Twenty Dresses: Acquired in 2019, Twenty Dresses utilizes the latest runway trends to create stylish apparel for consumers through prints, silhouettes, and details catered to appeal to modern women.

f) Nykd by Nykaa: Built to simplify a complex product for Indian consumers, launched in 2020. Focused on creating products for everyday comfort.

g) Pipa Bella: Pipa Bella is a brand for contemporary and personalized fashion jewelry for our consumers. Pipa Bella was acquired in March 2021.

h) RSVP: Launched in October 2019, RSVP aims to be the go-to brand for elevated women’s western wear.

i) Gajra Gang: Launched in August 2021, Gajra Gang aims to build a niche between trendy fast fashion and luxury, Indian wear.


As of August 31, 2021, we operated 80 physical stores (comprising 79 stores for beauty and personal care products and one store for fashion products) in 40 cities of India across three formats:

a) Nykaa Luxe: The Nykaa Luxe store format offers a luxury beauty experience. The format showcases prestige and luxury international and domestic brands. As of August 31, 2021, Nykaa operated 38 Nykaa Luxe stores across India in cities such as Mumbai, Delhi, and Kolkata are approximately 1,134 sq. ft. in size on average and are present in grade A malls and high streets

b) Nykaa On-Trend: The Nykaa On-Trend stores offer a differentiated experience for our consumers with the current best-selling products chosen across beauty and personal care brands. These stores are on average 732 sq. ft. in size. As of August 31, 2021, Nykaa operated 32 Nykaa On-Trend stores across India in cities such as Coimbatore, Chennai, and Jaipur.

c) Nykaa Kiosks: The Nykaa Kiosks are free-standing units usually in the atriums of shopping malls. Nykaa predominantly sells owned brands through these kiosks. As of August 31, 2021, the company operated nine Nykaa Kiosks stores across India in cities such as Bengaluru, Indore, and Mohali.

Business Verticals of Nykaa:

a) Beauty & Personal Care Offering:

  • Nykaa has 2,56,149 SKUs from 2,644 brands primarily across make-up, skincare, haircare, bath and body, fragrance, grooming appliances, personal care, and health and wellness categories as of August 31, 2021.
  • The Portfolio of brands includes domestic brands, international brands, luxury & prestige brands, premium brands, niche, and cult brands.

b) Fashion:

  • Nykaa Fashion was launched in 2018.
  • As of August 31, 2021, Nykaa Fashion housed 1,434 brands and 28 Lakhs SKUs with fashion products across four consumer divisions: women, men, kids, and home.
  • The company has 16.1% of fashion vertical GMV at full-price collections (at 10% or fewer discounts) for the five months ended August 31, 2021, respectively. Further, the average value of Orders on the Nykaa Fashion mobile application and website was ₹3,977 for the five months ended August 31, 2021.
  • Nykaa Fashion also has seven owned brands. These owned brands are available on our online channel and at one physical store, and third-party retailers for many brands.

Key Metrics:

Number of Orders & Monthly Average Unique Visitors:

Nykaa- Key Metrics: Number of Orders & Monthly Average Unique Visitors
Nykaa- Key Metrics: Number of Orders & Monthly Average Unique Visitors
  • The Company has reported a significant rise in consumer visits in both of its key business verticals i.e., Fashion & Beauty & Personal Care.
  • Also, the Monthly Average Unique Visitors has increased over the last 3 financial years on account of rising internet usage, increasing digitization trends, and increasing online users & shoppers during Pandemic.
  • The Number of Orders has reached 65.9 Crores in 2021 in Beauty & Personal Care Products while the number of orders stood at 17.2 Cr. in 2021 in Fashion Category.
  • The Monthly Average Unique Visitors of Nykaa have increased YoY in both categories i.e., Beauty & Personal Care Products and Fashion. Remarkably the monthly average unique visitors have crossed the mark of 2 Crores for Beauty & Personal Care and 1-Crore mark for Fashion category in 5-months ended August 2021.

Orders & Average Order Value:

Nykaa- Key Metrics: Orders & Average Order Value
Nykaa- Key Metrics: Orders & Average Order Value
  • The Orders of Nykaa have reached 1.71 Cr. in Beauty & Personal Care Segments and 0.24 Cr. in Fashion Segment for the year 2021.
  • While the Average Order Value in Nykaa is also quite phenomenal which stands at 1,886 Rs. For Beauty & Personal Care Products and Rs. 3,197 in Fashion Segment for the 5-month ended August 2021.

Gross Merchandise Value:

Nykaa- Key Metrics: Gross Merchandise Value
Nykaa- Key Metrics: Gross Merchandise Value
  • In the FY21, 1.71 Cr. Orders were placed on the platform for beauty and personal care products with a total GMV of Rs. 3,380 Cr., a 35.3% increase over the Financial Year 2020. For the 5 months ended August 31, 2021, 1.02 Cr. Orders were placed with a total GMV of Rs. 1,932 Cr.
  • In the Financial Year 2021 and for the five months ended August 31, 2021, 1.02 Cr. and 2.1 Cr. Orders, respectively, were placed for fashion products with a total GMV of Rs. 666 Cr. and Rs. 690 Cr., respectively.

3) Industry Overview:

Nykaa- Key Metrics: Industry Overview
Nykaa- Key Metrics: Industry Overview
  • India will be a huge ₹91,00,000 Cr. retail opportunity by 2025
  • This growth was enabled by the rising middle class, soaring income levels, increasing demand from Tier 3-4 cities and Rural markets, rise in youth spending, improvement in infrastructure, and the entry of new Indian and global brands across the product categories.
  • Discretionary retail is set to make a recovery and register healthy growth in the future years to grow at a CAGR of 17% to reach approximately ₹31,00,000 Cr. by 2025.
  • Fashion and BPC combined, accounted for 35% of the discretionary retail space in India in 2020.

India’s Beauty & Personal Care Market:

Nykaa- Key Metrics: India’s Beauty & Personal Care Market
Nykaa- Key Metrics: India’s Beauty & Personal Care Market
  • India is projected to become an Rs. 1,98,100 crores beauty and personal care opportunity by 2025.
  • The Beauty and Personal Care Market in India were sized at Rs. 1,26,700 crores in 2019, growing at a CAGR of 13% in the last 3 years.
  • Major Growth Drivers: Growth in BPC Spend by Youth, Increasing BPC Spend from Non-Metro Cities, Rise in Spend on Specialized BPC Categories, and Rise in Popularity of Online-Content Delivery.
  • The online Beauty and Personal Care Market in India have grown at a promising 60% CAGR in the last 4 years, penetrating 8% of the India Beauty and Personal Care Market in 2020.

India’s Fashion Market:

Nykaa- Key Metrics: India’s Fashion Market
Nykaa- Key Metrics: India’s Fashion Market
  • India is projected to become ₹8,70,200 crores fashion opportunity by 2025.
  • The size of the Fashion Market in India was ₹4,18,600 crores in 2016, constituting more than 9% of the retail market. Apparel accounted for approximately 80% of this market and footwear and accessories combined covered the remaining 20%.
  • Major Growth Drivers: Growth in Fashion Spend by Youth, Increasing Spend on Fashion from Tier-2 Cities, Rise Influence of Social Media, Growth of Men’s & Kid’s Segments, and Rise in Popularity of Online-Content Delivery.
  • Online fashion sector in India has grown at a promising 25% CAGR in the last four years, penetrating 12% of the India Fashion Market in 2020.

Market Opportunity:

Nykaa- Key Metrics: Market Opportunity
Nykaa- Key Metrics: Market Opportunity

4) Financials:

Nykaa- Financials
Nykaa- Financials
  • The Revenue of the company has grown at a CAGR rate of around 48.2% between FY19 to FY21 from Rs. 1,111 Cr. in FY19 to Rs. 2,441 Cr. in FY21.
  • Likewise, the EBITDA of the company has grown significantly from Rs. 20 Cr. in FY19 to Rs. 161.5 Cr. in FY21 and registering EBITDA Margin of 6.6%.
  • In terms of profitability, the company has turned profitable in FY21 and registered a Net Profit of Rs. 61.8 Cr.

5) Strengths & Risks:


  • One of India’s leading lifestyle-focused consumer technology platforms.
  • Resilient, capital-efficient business with a combination of strong growth and profitability
  • Data analytics capabilities powered by scalable data engineering allow us to consume a large number of data points across consumer interactions, product attributes, consumer demographics, marketing campaigns, inventory, and pricing.
  • The founder-led company supported by a professional management team
  • Continue to acquire new consumers and increase consumer loyalty
  • Further, expand Omnichannel capabilities
  • Focused, selective international expansion as well as acquisitions and joint ventures in India
  • Online-offline integration


  • Failure to acquire new consumers or fail to do so in a cost-effective manner
  • Dependency on the growth of the online commerce industry in India and ability to effectively respond to changing user behavior on digital platforms.
  • The company derives a significant portion of GMV from the top three categories, and business may be adversely affected if products in these categories do not perform as well as expected.
  • Pending litigations against the company, Subsidiaries, and certain of its Directors.
  • Highly Competitive Industry
  • Reliance on third-party data centers and third-party providers for the business & operations
  • The seasonality of the business affects the quarterly results and places an increased strain on the operations
  • High Attrition Rate of the employees- 11.43%
  • Increases in operational costs could adversely affect our results of operations.
  • Falguni Nayar Family Trust, one of the Promoter has pledged 20,311,800 Equity Shares in favor of a systemically important NBFC, Infina Finance Private Limited (“Infina Finance”), aggregating to 4.35 % of the company’s pre-Offer Equity Share capital.

6) Valuations:

Nykaa- Valuations
  • There are no listed players in the Indian Stock Market which is engaged in the similar business
  • At the upper price band of Rs. 1,125 and FY21 EPS of 1.34, the stock is demanding a P/E ratio of 839.5. While the Price to Sales ratio of the company is 21.8x
  • The Expected Market Cap of the company at the time of listing is around Rs. 53,200 Cr.

Should You Invest?

Nykaa was founded by Falguni Nayar, a former Investment Banker with Kotak Bank in 2012. The company is one of the leading lifestyle-focused consumer technology platforms and is different from other start-up companies which are loss-making. Nykaa has recently turned out to be a profitable company and has a significant growth space to grow. On the first day itself, the retail quota has been fully subscribed. The investor who is looking for Listing Gain can surely proceed to bid for this IPO as the current Grey Market Premium is around Rs. 700. But for investors looking at this company for a long-term horizon, need to assess the company very well and should wait for at least 3-4 quarters to know more about the company. Do not consider this as direct investment advice and do-follow financial advisor before making any investment decisions.

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